October 2010

October 28, 2010

Bomb Plot: Federal law enforcement authorities arrested a Northern Virginia man Wednesday in connection with an alleged plot to carry out terrorist bombings at stations in the Washington Metro system, the Washington Post reports.

Case Closed: The Federal Trade Commission announced Wednesday that it had ended its investigation of Google’s collection of Internet users’ personal communications by the company’s Street View cars, The New York Times reports.

No Deal: Wall Street deal-maker and former U.S. car czar Steven Rattner recently reached a tentative settlement with Securities and Exchange Commission staff over his role in a pay-to-play investigation, but has been stymied in efforts to forge a similar deal with New York Attorney General Andrew Cuomo, The Wall Street Journal reports.

SEC Investigation: Tiger Asia Management LLC, the New York-based hedge-fund firm led by Bill Hwang, received a subpoena from the U.S. Securities and Exchange Commission, following allegations of insider trading by Hong Kong’s securities regulator, according to Bloomberg.

Bargain Hunting: Wal-Mart, the world's biggest retailer, may scale back its $4 billion bid for Massmart by nearly half, a move that could keep the South African firm listed in Johannesburg, Reuters reports.

October 27, 2010

Lawyers for a Washington man who was kicked off a grand jury are fighting the government's effort to dismiss his suit against a federal prosecutor and a D.C. Superior Court official, saying that neither defendant is completely insulated from liability.

The Superior Court official, Suzanne Bailey-Jones, terminated Atherton’s service in 2001 based on alleged complaints from other grand jurors. A federal prosecutor, Daniel Zachem, relayed the complaints to Jones. Other jurors were concerned Atherton was disrupting the process—refusing to follow directions.

Atherton (at left) said in court papers and in interviews that he wasn’t disrupting. He wanted more information from the government to ensure the integrity of any indictment. The government, Atherton alleges, wanted the panel to indict for crimes that were not explained in an instruction book provided to jurors.

“Apart from Mr. Atherton’s statutory right to serve out his term as a grand juror, Mr. Atherton also has a fundamental right to serve his term as a conscientious and engaged grand juror, and not be fired for doing so,” Foley partner David Ralston Jr. said in court papers filed Tuesday evening.

Atherton’s attorneys said the court papers that his removal from the panel was “an incursion into the independence of the grand jury altogether.”

Lawyers for Jones argue she had the power to dismiss Atherton from the grand jury. And Zachem’s attorneys said he is protected from liability because he was performing his role as a prosecutor.

UPDATE, 3:25 p.m.: Retired Justice Sandra Day O'Connor has just issued this statement in response to questions regarding her participation in "robo-calls" urging Nevada voters to support a ballot initiative on judicial elections: "I did not authorize the use of my recorded statement as part of automated telephone calls to Nevada residents, and I regret that the statement was used in this way. In addition, I view my efforts in support of judicial reform as consistent with the Code of Conduct for U.S. Judges.”

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It began as an amusing story about a technical glitch in some automated phone calls that went out to voters in Nevada. But it has since turned into a discussion of judicial ethics involving retired Justice Sandra Day O'Connor and her passionate campaign in favor of judicial election reform.

A story in Monday's Las Vegas Review-Journal reported that a significant number of Nevada voters received so-called automated "robo-calls" with the voice of Justice O'Connor urging them to support a Nevada ballot initiative that would change the way Nevada judges are selected toward a merit selection/ retention election system.

The problem was that the calls went out at 1 a.m. insted of the intended 1 p.m. time. The group sponsoring the calls has apologized profusely and the marketing company that made the error has been fired.

But conservative commentator Ed Whelan saw another problem: "Do the ethics rules governing federal judges really permit a federal judge to robocall voters in support of a ballot initiative?" In a National Review Onlineentry Whelan noted that Canon 5 of the Code of Conduct for United States Judges prohibits them from engaging in political activity -- except as permitted by Canon 4, which allows judges to speak to the public and to legislators about legal matters and the administration of justice.

Whelan, who also is president of the D.C.-based Ethics and Public Policy Center and a former law clerk to Justice Antonin Scalia, wrote that O'Connor's personal advocacy of a ballot initiative is not the kind of legal discussion Canon 4 contemplates.

And then, by a strange coincidence, the U.S. Court of Appeals for the 9th Circuit on Tuesday handed down a decision in which O'Connor participated. (Retired justices are permitted to sit by designation in cases in lower federal courts.) The decision in Gonzalez v. Arizona struck down a 2004 ballot initiative in that state that required prospective voters to prove their citizenship. Referring to O'Connor, Whelan noted the ruling and said "it could help her outreach" to Hispanic voters in Nevada. Whelan stressed he did not think O'Connor voted in the case for that reason, but said it is "just one illustration why the ethics rules bar her from engaging in political-campaign activity while still sitting as a federal judge."

The episode raises several ethical issues, including the fact that neither Canon 5 or Canon 4 nor any other part of the code of conduct for federal judges applies to Supreme Court justices, sitting or retired. At various times in different contexts, justices have said they abide by the code nonetheless, but the fact is that "as a technical matter, they are not covered," said Jeffrey Shaman, a judicial ethics expert and professor at DePaul University College of Law. "The idea was that Supreme Court justices are so visible that any misconduct could be taken care of through the political process."

But Shaman, along with another top judicial ethics expert, New York University's Stephen Gillers, don't see anything ethically wrong with what O'Connor has done in the first place in relation to the Nevada initiative. "She has a special expertise about these matters, and I don't see anything wrong with her speaking out about a matter of public concern like this," said Shaman, who asserts that O'Connor's advocacy falls in the category of speech about the administration of justice that the canons permit.

Gillers also makes the point that with a ballot initiative, the voters act essentially as legislators. "There is no doubt she could testify before the legislature" under the judicial canons, said Gillers. "Speaking to voters is no different."

Gillers and Shaman both also agreed that O'Connor's participation in a 9th Circuit case involving an entirely different ballot initiative in a different state does not create a conflict of interest. "That's diabolical," said Gillers. "Quite a stretch," said Shaman. O'Connor has thus far not commented.

Lawyers on a panel sponsored by the U.S. Chamber of Commerce's legal arm said today that they want to find better ways to investigate and sanction trial lawyers for alleged misconduct.

The lawyers, all specializing in tort defense, expressed frustration with how courts and state bar regulators have handled misconduct cases in recent years. The handling of such cases varies widely among states, they said, given that misconduct is almost always addressed at the state level.

“We’ve not done a good job in our profession of policing ourselves,” said James Stengel, head of the litigation practice at Orrick, Herrington & Sutcliffe.

“You tend to see these matters pursued very slowly. They take a very long time,” added Jonathan Drimmer, a partner in the Washington office of Steptoe & Johnson.

They spoke today at an annual legal conference sponsored by the Chamber’s Institute for Legal Reform. Held at the Chamber’s downtown Washington headquarters, the business-backed conference is addressing an array of issues related to class actions and other litigation.

The American Association for Justice, which represents plaintiffs’ lawyers, is using the conference as a chance to highlight the Chamber’s own use of litigation — which the association says is hypocritical given the Chamber’s support for limiting lawsuits by others.

At the conference, defense lawyers cited several cases of alleged misconduct by plaintiffs’ lawyers. In 2005, for example, U.S. District Judge Janis Graham Jack in Corpus Christi, Texas, effectively halted litigation related to silica because of what she called evidence of malfeasance by doctors and plaintiffs’ lawyers.

While there have been state disciplinary actions against medical professionals, none of the lawyers in the silica litigation has been sanctioned, said Daniel Mulholland, who was also on the Chamber panel. Mulholland is a partner at Forman Perry Watkins Krutz & Tardy in Jackson, Miss., and was on the defendants’ steering committee for the silica litigation.

“Lawyers do a worse job of policing themselves than even the doctors do,” Mulholland said.

The Supreme Court last night split along conservative-liberal lines, with Justice Anthony Kennedy joining the conservatives, to allow the Arizona execution of Jeffrey Landrigan to proceed in spite of lower court concerns about the safety of the drugs being used for the lethal injection. After he uttered his last words "Boomer Sooner" -- a University of Oklahoma fan slogan -- Landrigan was executed at 12:26 a.m. Eastern Time today, according to this CNN account.

The eleventh-hour court dispute stemmed in part from the shortage of sodium thiopental, an ingredient in the "cocktail" of drugs typically used in lethal injections in the United States. The sole U.S. manufacturer has stopped production, but Arizona obtained the drug from a foreign source. The state resisted requests for details about the sourcing by attorneys for Landrigan, citing a state law that protects the privacy of individuals and entities involved in executions.

Without that information, Landrigan asserted that the use of a drug from a source not approved by the Food and Drug Administration created the risk of serious pain during the execution, in violation of the Eighth Amendment. Judge Roslyn Silver of the U.S. District Court in Phoenix agreed and stayed the execution, stating that without the information she was "left to speculate" whether the foreign drug would cause pain and suffering. The state appealed, and a panel of the U.S. Court of Appeals for the 9th Circuit upheld the stay. In its opinion the 9th Circuit said that because of uncertainty about the information about the drug that the district judge had before granting the stay, "we cannot say the district court abused its discretion." The ruling also implied that the state's reticence left defendant Landrigan unable to meet his burden under the Supreme Court's 2008 decision in Baze v. Rees to establish that a "substantial risk of serious harm" might stem from using the drug.

But the high court, in its order late last night vacating the stay, turned that uncertainty to the state's advantage. The unsigned order, quoting from the Baze precedent, said "speculation cannot substitute for evidence that the use of the drug is 'sure or very likely to cause serious illness or needless suffering.' ... There was no showing that the drug was unlawfully obtained, nor was there an offer of proof to that effect."

A Very Bad Year: Howrey has lost 63 partners since last winter and posted the biggest profits per partner decline among the AmLaw 100 in 2009. The American Lawyer takes a look at the story behind Howrey’s very bad year.

Boot Camp: Consumer lawyers have been traveling to a remote 160-acre farm in the mountains of western North Carolina since 2006 to network, drink Scotch and prepare for legal combat in foreclosure and bankruptcy cases, Bloomberg reports.

Under Seal: Goldman Sachs Group Inc. has always closely guarded the secrets of its lucrative high-speed trading system. Now the securities firm is getting a help from an unusual source: federal prosecutors, according to The Wall Street Journal.

Power Shift: Across Washington, lobbyists have been working behind the scenes now for months to prepare for a power shift if Republican win the majority in Congress, The New York Times reports.

AU Professor: Montgomery County detectives were pursuing leads in the case of a slain American University professor but by late Tuesday had not linked the 18-year-old found driving her stolen Jeep to her killing, the Washington Post reports.

October 26, 2010

The lawyers representing a class of Native American farmers and ranchers say they are confident the claims process that is part of a $760 million settlement will not have the same problems that plagued a similar suit against the U.S. Department of Agriculture.

In the earlier suit, where a class of African American farmers sued the government over alleged discrimination in federal lending programs, thousands of plaintiffs missed out on compensation because claims were submitted after deadline. The Obama administration is seeking congressional approval for $1.15 billion to compensate black farmers who were excluded from the settlement in a case called Pigford I.

Last week, Judge Emmet Sullivan of Washington’s federal trial court asked the attorneys in the Native American farmer discrimination case Keepseagle v. Vilsack to address how the proposed settlement avoids the Pigford issues.

On Monday, Justice attorneys and the lawyers for the plaintiffs filed a joint submission to try to alleviate Sullivan’s concerns. Click here for a copy.

The lawyers in Keepseagle, including Joseph Sellers of Washington’s Cohen Milstein Sellers & Toll and Jenner & Block partner Paul Smith, said in the court papers that the claims process is not adversarial—unlike the one in Pigford. In Keepseagle, the attorneys said, the claims decisions are meant to be final with no right of appeal. The plaintiffs’ lawyers describe the Keepseagle process as “simpler” than the one used in Pigford.

In Pigford, the government paid claims with no limit on the total amount payable. The attorneys in the Native American discrimination suit said the settlement establishes a $50 million cap on total claims for class members who opt for a particular track. Under that scheme, which is more rigorous than a separate track, individual awards are capped at $250,000.

Also, the plan to notify potential claimants in Keepseagle differs from the plan used in Pigford.

The Keepseagle plan calls for spending more than $2 million on media advertisements to spread the word about the settlement—more than double the amount spent in Pigford. The plan calls for Internet advertising and publication in media that target Native Americans, farmers and ranchers.

A hearing in the Keepseagle case is scheduled for Friday afternoon, where the plaintiffs’ attorneys will make their pitch to Sullivan to approve the deal.

A former Zuckerman Spaeder client says that his fee dispute with the firm belongs in arbitration, despite the fact that a federal trial judge determined that he didn’t push for arbitration in his initial answer to the firm’s lawsuit. James Auffenberg Jr., a former Zuckerman client fighting with the firm over $834,000 in allegedly unpaid fees, argues that point in an Oct. 22 brief before the U.S. Court of Appeals for the D.C. Circuit.

The underlying case involves work Zuckerman performed on behalf of Auffenberg, who had hired the firm after he was indicted in 2007 for allegedly dodging millions in federal taxes. After winning an acquittal for Auffenberg last year, Zuckerman filed a suit against him, alleging in its April 27, 2009 complaint that he hadn’t paid $834,000 in legal fees.

Auffenberg has argued throughout the case that Zuckerman told him he would have to pay no more than $1.5 million for the firm to represent him but then sent him a bill for an additional $834,299 after the acquittal.

In January, almost a year into the litigation, Auffenberg, who is being represented by Thomas Duckenfield III and David Holzworth of Adorno & Yoss, moved to stay the case pending arbitration before the D.C. Attorney/Client Arbitration Board. D.C. Bar rules generally require lawyers to arbitrate fee disputes at the client's request.

Judge Reggie Walton of the U.S. District Court for the District of Columbia denied Auffenberg’s motion in a March 18 order, citing “the defendant’s failure to invoke arbitration prior to actively participating in this litigation.” One day later, Auffenberg filed for an interlocutory appeal.

Auffenberg’s brief argues that the trial court erred by denying his motion for arbitration because despite the fact that he did not mention arbitration in his initial answer to Zuckerman’s lawsuit, he “communicated his intention to arbitrate early and often.” He also draws a distinction between the litigation that progressed over his counterclaim of malpractice and the effort to move the case into arbitration.

Auffenberg’s brief argues, “Zuckerman initiated litigation activities targeted at the non-arbitrable malpractice claims. Auffenberg was forced to respond, in part because of the trial court’s failure to timely hear and decide Auffenberg’s motion to stay.” The brief adds, “This case is complicated by the fact that it closely related arbitrable and non-arbitrable claims arising out of the same transaction.”

Zuckerman has until Nov. 22 to file its brief. Zuckerman is being represented by firm partner Francis Carter and associate Douglas Miller.

The fact that the D.C. Circuit has asked the parties to submit briefs in the case comes thanks to an early procedural win for Auffenberg. Last month, the D.C. Circuit denied Zuckerman’s request to decide the dispute without receiving briefs.

The D.C. Circuit said in a Sept. 1 per curium opinion, “The merits of the parties’ position are not so clear as to warrant summary action.”

The Republican who could become chairman of the House Judiciary Committee in January says it's time for an "immediate accounting" of money spent on immigration enforcement.

Rep. Lamar Smith (R-Texas), who is now the committee’s ranking GOP member, is expressing fresh interest in immigration enforcement after new allegations of waste. On Friday, the inspector general of the U.S. Department of Homeland Security released a 90-page report (PDF) on the so-called 287(g) program, under which state and local authorities can enforce federal immigration laws. The report found, among other things, that immigration officials couldn’t explain all of their travel expenses.

For example, the report says, officials with U.S. Immigration and Customs Enforcement spent $6,329 per person for travel related to reviewing 287(g) agreements around the country. By the inspector general’s calculations, the travel should have cost about $2,300 per person, and immigration officials did not supply documentation for the higher number, the report says.

Smith said the situation is unacceptable. “It appears that ICE officials have abused their authority when it comes to 287(g) funds and an immediate accounting before Congress is necessary,” he said in a statement released late Monday.

He added that 287(g) programs are “critical” to immigration enforcement. “We must ensure that federal funds are not squandered by government agencies instead of being directed to law enforcement communities that can help enforce our immigration laws,” Smith said.

If Republicans win control of the U.S. House of Representatives in the Nov. 2 midterm elections, then Smith is likely to become chairman of the Judiciary Committee. Immigration falls within the committee’s jurisdiction, so oversight of the 287(g) program could quickly become a focus of the committee’s work.

A spokeswoman for the Department of Homeland Security had no immediate reaction to Smith’s comments.

Legal Pit Bull: Kathy D. Patrick is a Houston lawyer who spends her Sundays teaching children about God. The rest of the week, according to one attorney who knows her, she can be “as frightening as a pit bull on steroids.” Patrick represents bond investors including the Federal Reserve Bank of New York and BlackRock Inc. who are seeking to force Bank of America to buy back bad home loans, Bloomberg reports.

Deal Blockers: Several popular online travel companies are joining forces to oppose Google Inc.'s proposed $700 million purchase of ITA Software Inc., the leading provider of flight data, saying the deal would give it too much sway over the travel sector, according to The Wall Street Journal.

AIG Loss Hidden: The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments, according to a report by the special inspector general for the Troubled Asset Relief Program, The New York Times reports.

Chinese Pirates: Counterfeit commerce over the Internet has soared in the past couple of years, turning what had been an irritant to businesses into a serious competitive threat, according to a special report by Reuters.